Osborne tells eurozone leaders to

21st July 2011

His comments came as Germany and France reached a common position on a second bailout of Greece in their effort to prevent the country's debt crisis from spreading through Europe, reports the Daily Telegraph.

The chancellor said he was "very ­worried" about the possibility of the eurozone crisis spiralling out of control, warning that it posed an additional threat to Britain's already "tough" economic situation.

"We see the potential for a set of economic events that could be as damaging as 2008," he said.

The accord came after seven hours of talks late into Wednesday night between German Chancellor Angela Merkel and French President Nicolas Sarkozy in Berlin, sources in both governments said, reports the Daily Telegraph.

European Central Bank President Jean-Claude Trichet joined Ms Merkel and Mr Sarkozy for part of the talks.

Mr Osborne said he was optimistic that European Union leaders would make progress getting private investors to contribute to the cost of Greece's bailout. But he said this was only the first step towards a necessary fiscal union in the eurozone.

The Financial Times (paywall) said the British chancellor recognised that his enthusiasm for greater eurozone integration was a reversal of British policy, which had originally aimed to frustrate the creation of a two-speed Europe.

In the interview, Osborne called for greater economic integration in the single currency bloc and said that the idea of eurozone bonds was "worthy of serious consideration".

However, he argued that the loss of sovereignty implied by solutions such as eurobonds justified the UK's refusal to join the euro.

He also called for private-sector bond holders to share the burden and for the eurozone's bailout facility to be expanded to include the purchase of Greek bonds.

However, Mr Osborne said that Britain would not take part in any euro-zone solution.

"Britain's taxpayers stand behind the pound. Europe's tax payers are going to have to stand behind the euro," he said.